EU faces 'lost generation' of almost 8 million young people

"Not only employment and social policy, but also education policy," he continued, looking ahead to the next European Semester, the EU's recently-established yearly cycle of economic policy co-ordination.

The continued eurozone crisis, now in its third year, has seen the commission make recommendations in policy areas that, pre-crisis, were considered an absolute taboo.

Now it tells member states where to make changes to wage, employment and social policies.

"We have seen during this crisis that some countries have been performing better also because of the capacities of their education systems to respond to the demand for jobs and training," said Barroso, indicating that this is also going to come under commission scrutiny.

Barroso's words came as the OECD, a Paris-based club representing the world's most developed countries, downwardly revised this year's growth estimates for almost all euro countries.

"The recession is taking hold in the euro area," said OECD secretary general Angel Gurria at the same conference.

He pointed out that for the EU to reach its 2020 goal of having 75 percent employment in the union, then 17 million jobs will have to be created.

The 'lost generation'

Gurria referred to a "potential lost generation" of 7.8 million young people who neither have a job nor are in education or training.

He added that policy-makers are facing a new phenomenon of "structural long-term unemployment" where people are unemployed for over two years. And the longer they are unemployed, the harder it is to get a job when one is available.

Employment Commissioner Laszlo Andor called it a "jobs crisis."

But with debt-ridden member states slashing spending, politicians have been struggling to get to grips with the problem.

This is particularly so in bailed-out countries, which have been implementing harsh austerity measures in return for their borrowed money.

Greece, Ireland and Portugal have joblessness rates of 22.4 percent, 14.9 percent and 15.7 percent respectively. Spain - considering whether to ask for a bailout - has the highest eurozone rate at 25.1 percent.

Among the under-25s, the figures are much more extreme. In this age-group, more than one in five are unemployed in Ireland and Portugal, while 53 percent of young Spaniards and 55 percent of young Greeks do not have a job.

A very "innovative" and "stringent" public policy is needed to try and boost job levels, said Horst Reichenbach, in charge of overseeing Greece's reform programme, while Gurria pointed to the Danish policy of expanding and contracting government spending automatically to reflect ups and downs in the economic cycle.

Suggesting ways to raise money for investment, Ireland's enterprise minister Richard Bruton spoke of asset sales and "capitalising revenue streams" such as charging for water.

"Even in a fiscally constrained economy there are measures that can be taken, " said Bruton.

But he also suggested something that EU leaders have crucially not been able to manage since the onset of the crisis.

Boosting consumer spending and business investment would be much easier if there was an "environment of confidence" in the eurozone, he noted.